Post Comment: Golden goodbye is hard to justify

The battle over the Government’s decision to scrap Advantage West Midlands, the agency once charged with supporting the West Midlands economy, is well and truly over after the organisation published its final set of accounts.

The battle over the Government’s decision to scrap Advantage West Midlands, the agency once charged with supporting the West Midlands economy, is well and truly over after the organisation published its final set of accounts.

But there’s one last sting in the tail, with the news that saying goodbye to departing AWM managers has set the taxpayer back by more than £7 million.

Perhaps it’s worth remembering that many business leaders in Birmingham and the wider area wanted to keep the agency. That was certainly the view of Birmingham Chamber Group.

When it was up and running, Conservatives and, to an extent, Liberal Democrats complained that Advantage West Midlands was expensive and inefficient. We can only guess whether its work could have been carried out more effectively or cheaply, but what we do know is that it made a positive difference to the regional economy.

Yes, AWM spent a lot of taxpayers’ money provided by the Treasury, as well as administering funds from the European Union. But it used that cash to help the economy grow and create jobs, creating economic benefits for the region which far exceeded the money spent.

That was the verdict, year after year, of the national Audit Office, which scrutinised the work of the regional development agencies. As we’ve noted, employers generally also welcomed the work of AWM.

Shutting it down would inevitably lead to costs. But many people will be shocked at the amount that has been paid out.

Quite how staff managed to obtain payouts of more than £300,000 is an interesting question, and one suspects that the National Audit Office wouldn’t be quite so impressed with this.

Anyone who is made redundant, or who takes early retirement – which in this case was surely related to the fact that their employer was being abolished – is entitled to compensation.

But for most of us, that means a figure which is far less impressive. There’s certainly no legal requirement to pay out anything like this.

One can only assume that executives were offered contracts offering this sort of payout, in the event that their jobs were abolished, when they first joined. If so, it would raise questions about the recruitment process. The private sector manages to recruit highly talented and capable managers with deals which, perhaps regrettably, are far less generous.

Having said that, there’s certainly a tendency in parts of the private sector for compensation and payouts at the top to balloon out of all proportion to the value that highly senior managers are really adding to businesses, or to the scarcity of their talents. We’ve seen this most graphically in the case of the banks.

But while excesses in the private sector can be soul destroying for hard-working staff, excesses in the public sector also stick in the throat of the hard-working taxpayers who provide the cash.